Episode #232: Luis Perez, Remoov, “We’re Removing That Headache And We’re Giving You That Piece Of Mind And Your Space Back”
Guest: Luis Perez is founder of Remoov, a startup offering full service removal of your unwanted items so you can sell, donate and recycle your clutter, saving you time, money, and space.
Date Recorded: 6/17/2020
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Summary: In episode 232 we welcome our guest, Luis Perez, Founder of Remoov. In today’s episode, we’re getting organized. We’re talking about taking the work off your hands of removing all of that unwanted clutter.
We discuss the idea that was prompted by the observation of inefficiency in the college move-in, move-out process. Luis took it upon himself to store outgoing students’ items over the summer, and sell them to incoming students in the fall. He found a market and traction, and today he’s running and growing this model with Remoov. We discuss operations and trying to find efficiency in this capital intensive business through technology and innovative processes.
We get into the logistics of entering new markets and targeting demographics such as baby-boomers that are likely to be downsizing. We talk about how the COVID pandemic has impacted the business, and the ‘on-your-feet’ thinking that led to Remoov opportunistically connecting with downsizing businesses.
All this and more in episode 232 with Luis Perez.
Links from the Episode:
- 0:40 – Intro
- 1:59 – Welcome to our guest, Luis Perez
- 3:27 – Luis’s first startup ventures
- 7:19 – The inspiration for Remoov
- 11:30 – How Remoov works
- 14:35 – Managing the business and the growth strategy
- 16:08 – Lessons from the early days
- 18:15 – The secret to the process
- 19:38 – The Meb Faber Show Podcast – Episode #48: Van Simmons, “The Rare Coin Market Can Go Up Dramatically, Quickly”
- 20:18 – Remoov’s competitive market
- 22:52 – Expanding into new markets
- 24:32 – Fundraising process
- 26:40 – How the pandemic has impacted Remoov
- 28:10 – Opportunities during COVID
- 32:27 – Our relationship with our things
- 33:45 – Memorable moments
- 37:02 – Customer acquisition
- 38:31 – Future plans for the company
- 40:00 – Minimally viable products for them to work with
- 42:40 – Selling partners
- 43:45 – What customers should know about Remoov
- 45:54 – The people who are on their marketplace to buy
- 47:33 – Most memorable part of the venture
- 50:13 – Most memorable investment
- 51:45 – Connect with Remoov: remoovit.com; firstname.lastname@example.org, twitter, Instagram, Pinterest, and Facebook
Transcript of Episode 232:
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Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s thoughts on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Welcome, podcast friends. We’ve got another great show for you today with arguably one of my favourite startup ideas today. Our guest is the founder of Remoov, a startup offering full-service removal of your unwanted items so you can sell them, donate them, or recycle your clutter, saving you time, money, and space. In today’s episode, we’re getting organized. We’re talking about taking the work off your hands by removing all that unwanted clutter. We discuss the company’s origin story with the old college move-in, move-out process. Our guests took it upon himself to store outgoing students’ items over the summer and sell them back to the students in the fall. He found a market and traction, and today, he’s running and growing his model with Remoov. We discuss operations and trying to find efficiency in this very capital-intensive business through tech. We get into the logistics of entering new markets, targeting demographics such as baby boomers that are likely to be downsizing, state sales and, of course, divorces. We also touch on some big sales like cars and million-dollar paintings and some really weird ones too. I’ll let you listen to hear those. We talk about how the COVID pandemic has impacted the business and the on-your-feet thinking that led to Remoov opportunistically connecting with downsizing businesses. Please enjoy this episode with Remoov’s Luis Perez. Luis, welcome to the show.
Luis: Hi, Meb. Thank you for having me.
Meb: We’re still in…well, I guess it depends on where you are in the world. I’m in Los Angeles. So, I was going to say we’re still on lockdown, but L.A., if you go to the beaches, it’s like nothing has ever changed. Where in the world are you today?
Luis: So, I’m actually in South San Francisco and it has still changed quite a bit here. I mean, you’re beginning to see the changes of people going out a little bit more, but it’s still pretty locked down, I’d say.
Meb: All right. Well, we’re going to talk about a lot of fun stuff today and eventually get to your company startup, one of my favourite startup ideas. So, no pressure, but let’s hear a little origin story first. Where’d you begin?
Luis: Yeah. So, I’m originally from Venezuela. I grew up there, moved to the U.S. for college, studied computer engineering at Michigan. From there, I mean, I was fortunate enough that I was graduated as a computer engineer right within dot-com burst. So, that didn’t really pick that very well. So, then I worked a little in banking, logistics, and then consulting, went over and did business school at Wharton in Philly and graduated in ’07 from business school right as the financial crisis happened. So again, not the best timing.
Luis: And then I worked at a hedge fund in New York for about five years, focused on distress investments as pretty much anyone did at that time. And I ended up moving out here to the Bay Area about nine years ago when my wife decided to go to business school.
Meb: Cool. If I remember doing a little due diligence, Remoov, which we’re going to talk about in a minute, wasn’t your first startup, right? You kind of went down the startup path before.
Luis: I did. It was probably around 2011 and I was still at the hedge fund and I realized that I had always been wanting to start my own company. And at the time I was being a little wary about the financial industry and where the things were going. So, I finally decided… One of the issues that I always had was my visa. Being able to actually stay in the U.S. and start a business. I got to the point where I was able to sponsor myself for a visa to start the company. And I spent a little time trying to figure out what to do. And mostly what I did is I started asking people what problems they were solving and how they solved them? And my first idea ended up being a company called Parenting Bridge. And I’ll tell you why that ended up not being the greatest idea, even though I think it has a lot of potential. But what Parenting Bridge became was a platform to help divorced and separated parents to share custody of children.
The idea is when divorced parents get together to exchange custody becomes one of the most contentious situations that brings a lot of fights. So, creating a platform that would allow that transition and coordination between parents to be a lot more amicable. Launched it. It started going. And I actually launched it the same month that I got married. So, it was a little weird. And started growing. But it got to the point, I was about a year into…probably about two years after I launched it and I realized I hated it. I just wasn’t passionate about the divorce space. I mean, I knew even though it was very much something that was very much needed, unless you’re really passionate about what you’re doing, it is too hard to build your own company. You have to love it like every second. You have to be thinking about it and be super excited about it. And I wasn’t, and I realized that was not what I wanted to spend my life doing. So, I closed it.
Meb: Yeah. I humorously joke there’s so much friction in the sort of whole divorce umbrella. And I’ve actually seen through friends and family, some of the probably modern competitors of what you’re talking about today. And one of my favourite things to do is reserve domains, by the way. I probably have like 50. They’re all terrible. But jokingly with my wife, who also thinks is funny, which is a good sign. One of the domains registered was one-click divorce, meaning like you both just want out. You don’t want to go through all the like gazillion dollars with lawyer fees, bunch of drop-down menus. Here’s what it is. Done. Listeners, if anybody wants to take over one-click divorce, hit me up. I’ll let you run with it. Okay. But also not passionate about the divorce space. What was next?
Luis: Essentially decided to shut it down. I’d spent few months…and I spent really the next nine months just trying out ideas. The one that got the most legs was, at that point, which I guess would have been more relevant now, it was a company, I launched it but then didn’t really do anything more with it. Just kind of test it out. The whole idea at that time was testing out little things, spending a month or two kind of building something, putting it out, seeing if it got any legs. But the one that did the most was a company called the Counter Point. And the whole idea was that understanding different points of view around the media was really, really complicated. We kind of had this confirmation bias where we only really read the things that kind of validate our points of view. I mean, and now it’s become a bigger problem eight years later, but the whole idea is that there will be an article about from the news and it would see arguments for and against articles so that you could actually get a more broad perspective on it. Launched it mostly [inaudible 00:06:46] within like the Stanford community. And it got a little bit of legs, but I quickly realized the biggest problem with that one, which is people don’t really want to hear opposing points of view.
Luis: They really don’t.
Meb: They want to hear confirming evidence all day long. And investors are the worst example of this. That if as soon as you come long or short a company, you know, you’re in the hedge fund space, half the people would just go look for things that validate their view. Don’t even get started on Tesla crowd, it’s such a great example on Twitter. My God, people get almost religious about it. Okay. Now, it’d probably be a billion-dollar unicorn at this point, but you just decided to shutter it, or was it just kind of a short experiment and what next?
Luis: It was about, yeah, about five months, built it, launched it. Started seeing if we’ve got any traction, trying to do different things to actually get it to grow. And it really didn’t. So, I closed it down. And then that was pretty much at the time that my wife was graduating from business school. And we were at a party and a bunch of her classmates that were in the final weeks of exams and they were freaking out because they needed to move out by the end of the week. And they didn’t know what to do with their stuff. And at the time I was like, “You know what? I’m not graduating. So, I’m just going to pick up everyone’s stuff.” And what I saw there was what I considered a market disconnect. You had at the end of the semester, a bunch of students that needed to leave their dorms or their houses, and they needed to get rid of stuff, but there was no buyers, because that summer kind of broken apart, it kind of created that market inefficiency.
And in the fall, the opposite happened. You had a lot of buyers, but no sellers. So, the idea there was to actually kind of bridge that gap between the two of them, of collecting all the items, stored them over the summer and then sell it to students in the fall. So, I had that idea, build a website three days later and launched it. And we started getting traction. It worked fairly well. We did it for the Stanford Business School for the Stanford law and a little bit of the Stanford undergrads. And we were off to the races. It worked pretty well for…and at the time the company was actually called Naked Room and it went well. So, we did that. We finished that first cycle by November, that year. And the plan was then to launch at 20 schools the following year.
So, I spent the next few months kind of preparing for that big launch. I mean, it was probably like May the following year as I was getting ready to launch it. I started really digging down in terms of like, what’s the size of this market? How big can it be? How do we address it profitably? And that’s when I realized that it’s a small market. Students are a lot of cyclicality and mostly students are pretty cheap, but at the same time, what started happening was that a lot of normal residents in the Palo Alto area started asking for help. They’re like, “Hey, I’m not a student, but I am moving out of my house. Can you help?” And that’s when we started like really figuring out like, what’s the real problem that we’re solving? What is it that we do? And what’s the value that we provide? And that’s where Remoov was born.
Meb: You had me thinking back to my time as a student, I went to Virginia and literally remember with such clarity, the exact issues you’re talking about, where people moving out and all of a sudden you see the curbs outside of the apartment buildings and dorms just littered with…I guess at that time it would have been compact monitors or whatnot that probably didn’t work anyway. But, and remember, there were some businesses, like you mentioned, for the university, it’s probably a good local lifestyle business, but it’s probably not a massive scale. So, anyway, you started to chat with the community. And at that point, what was next? You just say, “Hey, maybe we’ll open this up to San Francisco or maybe this is a bigger idea or what?
Luis: Yeah. So, the first thing we’ve figured out is that the name Naked Room would have worked for the normal residents. We had a cool name for students, but not for everyone else. And then we spent a lot of time interviewing potential clients. Like, “What is it that you need? Why are you seeking us? And why are you seeking our business? What is it that you’re trying to solve?” And one of the things we realized that we learned is that people wanted to be able to like click a button and make all their stuff disappear. Because right now, there’s very few options. There were very few options, which is if you have stuff that had some value, you could list it on Craigslist and maybe eBay, and then deal with all that haggling. And then you have to figure out donations and then you had to call like disposal company.
But there was not one solution like, “I want my headache to disappear. I don’t want to deal with all this stuff.” And that’s how Remoov was born. And we realized that, you know, it was a huge market between…and we focused somewhat on what we consider people that are getting rid of a lot of stuff. There’s an opportunity for us to continue to grow into the everyone’s base. Like if you have to sell just like one TV, but for now, our focus was on people that need to get rid of a lot of stuff. And that tended to be people who are like moving, downsizing liquidated states, businesses, people that were shuttering self-storage units, because the pain point that was much larger, the willingness to pay was much larger. And the cost to the customer was much larger by not using our service.
Meb: So, let’s say I’m moving out of my house, I’m in Palo Alto and I go to your website, walk me through kind of how it all works.
Luis: Yeah. So, we’re in the process of now launching an app as well, but that’s geared more towards the power users. I can explain those. But right now let’s say you’re moving into your house. Most clients, what they do is they just text photos and text-based has actually been really, really good because our service is not one like Uber that you’re going to be using every week. So, getting people to download an app that you like use it once, we thought it was too much work. So, but text-based actually provided…allowed us to actually collect all the information that we needed to get a client. So, let’s say you’re moving out. You just text the photos of all the items you want picked up within 24 hours. Usually, much sooner. You get an estimate. We’ll let you know, “Hey, Meb, we can pick up all your items. It’s going to cost this much. And these items we’re going to resell, these items we’re going to donate. These items are going to be for disposal, click here to book a pickup.”
And you say, “Great.” You click book your pickup. On the date of your pickup, our team shows up and they clear out your space of whatever you want gone. And then we bring it back to our facility. Here, we take care of doing the recycling and the disposal, and then the donations we get donated and we send you the donation receipt. And the most unique part is the resale. So, those items that are brought in for resale, they’d come in on consignment. They get appraised, professionally photographed. And then depending on… And we build a lot of metadata around them. So, we had, for example, wood, mid-century modern, and the brand Pottery Barn, depending on that metadata, we price the item and we match it with appropriate resell marketplace.
One of the challenges that has happened recently with…there’s an enormous amount of market places where you can sell your stuff. I mean, Craigslist, eBay, OfferUp, Letgo, of course, but then there’s a bunch of other ones. And, you know, if you’re selling some furniture, you might want to do it through Cherish. If you’re selling some clothing, it could be Poshmark or ThredUP. If you’re selling vinyls, it might be, Discogs. The end consumer, that’s way too much work for an end consumer to actually do. But if you build a technology to actually make that process easy, you can actually get each item in front of the right buyers and that’s it. So, those items get appraised and sold. And when they sell, you get money back.
Meb: So, there’s so much to like about this. The first in my mind being is you’ve hit upon one of our favourite discussions in the business spaces, anytime there’s some sort of like frustration arbitrage, and there’s so many areas to where reselling goods…I mean, I’ll chat with friends about, “Hey, you should just sell that.” You know, “I don’t want to sell it.” They say, A, “I don’t know how.” B, you then don’t know the correct optimal venue to where to sell it. If it’s a dress, maybe it’s Poshmark, like you mentioned, or ThredUP. If it’s a computer, it’s somewhere else. But the bigger one is just time. So, for me, the go-list, whether it’s stuff in my closet or everything in the house, then you deal with all the BS of Craigslist and 20 emails. Are they going to steal my information? I sold something recently and the person starts talking to me. It’s like, so you went to engineering school and I’m like, “Whoa, like, how does this person know all this stuff about me already?” It’s anyway, so many points of friction and it’s such an obvious business idea. Okay. So, that is the current vision. How then do you guys manage all that behind the scenes? Is it, you have a team that focuses on each…do you have to build your own software? Like explain to me the growth of how this…
Luis: So, we did a very untraditional Silicon Valley path, I guess, where we really didn’t raise much money until…I mean, we did really our seed round in November, but before that we had a little bit of angel money within one of the accelerators, but we bootstrapped it. I mean, so I came from a finance background. So, and for me, unless I knew that a business and the economics were positive, I just didn’t feel comfortable scaling. I just didn’t feel comfortable with scaling something that loses money. So, for me, it was like, I need to reach positive economics because once you get that, then you’re in a good spot. So, during that time, we spent a lot of time just building a lot of technology to…there were two things, which is like using technology to like make the process of collecting and processing inventory efficient, and then doing that same thing to make the process of selling simple.
And that’s what we spent a lot of other time and doing is built a lot of internal apps that allow anyone with a couple of clicks to like process an inventory, build a system that uses a similar model to like Amazon Turk, between appraisers to price the items. Then we’re doing now a combination of AI and that historical data to price a lot of that inventory and then match it to the appropriate market places. It is a capital-intensive business. So the way it actually works is by building technology to like automate a lot of those steps or reduce the amount of touches of any piece of inventory.
Meb: What are some of the things you guys have learned as you’ve gone down the operational path on this? Because I had actually considered, and I was brainstorming with friends years back where I was like, “Look, we’re going to put an ad in the ‘LA Times’ essentially.” And do what you’re talking about, where we’re going to say, “We can pick up your stuff for a weekend,” and just figure out all of the metrics of what you’re talking about. Meaning, is everyone just going to drop off a bunch of shitty rugs or is it actually going to be things that you can resell and do consignment with? Talk to me a little bit about the spectrum of what you guys see. Is it mostly junk? Is it a mix? How do people kind of…I imagine Palo Alto being a little more affluent than most neighbourhoods, how is the reality compared to sort of the vision in the early days?
Luis: So, I mean, one of the realities is that people do tend to overvalue their things, and that just happens. You know, “All of this is my mom’s China cabinet, it’s worth all this money.” And the reality is that no one wants a China cabinet anymore. You can give it away for free, but if you try. But it depends. I mean, so we serve…so right now we’re active in two markets, which is the whole Bay Area. Everything from like Oakland, Marin, all the way down to San Jose. And then we’re also launching Phoenix in December. And it depends, I mean, we do pickups some times that are like 98% junk. And in those pickups, you know, the whole idea is that the customers is, “Well, this 2% pickup fee was a little less than a junk on it, because at least 2% was donated or resold.”
And that’s it. And then we do all the pickups. We’ve done pickups that are multimillion-dollar states where we’ve gone in with some of the big auction houses like Christie’s or Sotheby’s because they have pieces of art that are worth $3 million. And, you know, and we’re getting tables that are worth $30,000 new. So, we do get the whole spectrum. And that is one of the challenges because when you have such a large spectrum of everything, there’s different ways in which they should be selling. You’re not going to sell a $10,000 table on Craigslist, but there’s marketplaces that actually cater to that type of inventory. So, what we had to do was figure out how do we build a system that no matter what type of item it’s coming in, we can handle it the same way without like changing the way our process works. And that’s actually the essence of what we built over the past few years.
Meb: Expand. Let’s hear a little more about that. What is sort of the secret sauce? Is it software-based? Is it sort of more of a process? How does it work?
Luis: Both. So, it’s a process-based that it relies on technology. So, what we figured out is like, what is information that’s required for us to capture at each stage of the interaction between the customer and us, and then once the item arrives to us and then doing the resale, and figuring out, okay, which ones are these ones can we change? What data do we need to capture and which ones can we automate? And then start building those. I mean, we’re still just getting started. I mean, our vision right now in the future and which is what we’re working on is a lot of the appraisal and selling we can do through AI. And we know it’s also more barrier to entry, which is we have this huge repository of data, of knowing, you know, like what does a west elm couch sell for? And that is unique and very, very defensible because unless you actually have done it, you really don’t have that information. And it is using that information that we’re building the systems that it was going to allow us to process inventory quickly. Because, I mean, the dream is that in a couple of years, you’re moving out of your house, you texted a bunch of photos and we automatically know the expected value of everything we’re going to sell for you and how much you are worth as a customer. And we might be able to start then doing some dynamic pricing around your pickup.
Meb: It’s interesting. One of our earliest podcasts was with a fascinating collector, Van Simmons. Listeners, if you haven’t heard it, go back. And he was one of the originators of the concept of securitizing, essentially, baseball cards by grading them. And so, if you’re going to buy a Ted Williams rookie and it was in this condition, it was worth this much. If it’s in this condition, they would rate them. And one of the things you guys are doing, which is so interesting that has to do with your business model, but may even invent a bunch of other business models at some point is the ability to come up with almost securitizing and pricing everything in the world, or at least things that people transact in, which I think is a non-trivial interesting part of your business, again, at some point. Random aside, sorry. I think most listeners would probably equate or be familiar with, and you can tell me, I assume this is a big competitor, maybe it’s not, GOT-JUNK. Is that sort of in the same universe at all?
Luis: So, I would say we would probably compete with 1-800-GOT-JUNK probably, about a third of the time, maybe less. And we do with some of those, which is the people that have a lot of junk, but most of our customers are the 1-800-NOT-JUNK, which is the stop that can actually be resold. And that is a complete difference. I mean, most of the customers that we work with would never consider junking their stuff. In those situations actually a bigger competitors, either your garage or like self-storage, which is one thing that people do is like, you know, “I have all this stuff. I don’t need it right now, but I don’t want to sell it because I don’t have time. So, I’m just going to put it in storage.” And I call self-storage kind of like your tax on space because it’s kind of like a, you know, you’re delaying the inevitable and you just put it in storage and you start paying $150 a month for the foreseeable future until 5 years later, that stuff has lost value. And you spend $10,000 in storage fees and you say, “You know what? This is all junk. I’m just going to throw it all away.” But that is something that people do with their valuables. I mean, it is one of the reasons the self-storage industry has been one of the best real estate asset classes over the past 10 years.
Meb: And so, for you guys, I imagine the more that I think about it, you probably are much more competitive modern version of the estate liquidation companies.
Luis: Exactly. So, we do a lot of those. So it is what we call it as an alternative to a state sale. And it is kind of, I’d say probably about 10% of our pickups actually come from people doing state liquidations because it is true. I mean, right now the traditional state sale model is you get a local company, they come in, they go through your house, they label the stuff and then they market your state sale on Craigslist and people come in and you’re really just trying to fire sell everything. And then at the end of the weekend, you’re left with a bunch of stuff and you have to deal with it. Our model is a little different, which is like, you know, the stuff that has value, you bring it in on consignment. And by doing an extended resale period, you don’t have to fire sell items. And then not only that, but you sell it through the right channel and you sell them nationally. So, you get ideally much better value for your stuff. And then not only that, but you get everything out of the house in one day as opposed to having to deal with a whole weekend of people running through your house. That is one of our industries. And there’s been very, very little innovation in that space, even though it’s huge.
Meb: Yeah. And if I recall, I mean, they take a pretty large value. I remember I talked to a few in Colorado a few years back and it felt so calcified and antiquated the way they did it. So, interesting. All right. So, why Phoenix, and as you kind of move on from the Bay Area, how do you think about targeting new locales and expansion choices?
Luis: Yeah, so we spent a lot of time trying to figure out what our next market should be. I mean, so one of the requirements that we were looking at was I’d wanted something to be geographically close. And the reason was so that myself and Sean, who’s the head of operations, are going to be traveling back and forth a bunch. Maybe you’re doing it all the way into East Coast, it’s a lot more time. And we’re such a small company and not only because we’re a small company, but we’re so limited in time that we’re spending it always in planes just travelling back and forth. It just became a cost for the company. So, we wanted something that was geographically close. Phoenix also is very fast-growing urban area. And one of our biggest markets is people that are downsizing. So, the whole baby-boomer generation, that’s one from a four-bedroom house to a smaller house. Phoenix has one of the largest populations in that demographic.
And finally is we wanted a non-tech city. One of the things we feared just from having to talk to other founders is if you do the typical, okay, you know, you launched San Francisco, Los Angeles, New York as your early-stage markets. When you go then raise a bigger round because, you know, you’re trying to expand to other markets. One of the biggest questions that you get is how do we know this really works in the rest of the U.S.? Okay, you’ve done New York, L.A, San Francisco, but those are different ecosystems than the normal U.S. city. And so, we wanted to do…by doing Phoenix, we kind of felt that we would answer that question without having it…so it wouldn’t be an issue when we started, you know, going for the next round. Yeah. Those were the biggest reasons.
Meb: Talk to me a little bit about the fundraising process. How hard is it to go down to Sand Hill or anywhere, and talk about picking up junk as a potential business model, were people receptive? And tell us, did you go a traditional seed or Series A route? How did it all work?
Luis: Yeah, so I did not enjoy the fundraising process at all. It’s interesting. I mean, you have what you call it…you know, you have fundraising CEOs and product CEOs. Some CEOs are just amazing at raising money. Like they just know how to sell it like crazy. I put myself more in the…for me, fundraising was kind of like, I know I had to do it, but I always felt that it was taking me away from the product, which really kind of like, I know I was always wanting to go back to the product. I’m like, “Oh, I’ll do the fundraising. I’ll do this reply later because I want to build this and fix this first.” So, I didn’t really enjoy the process of having to go through and then getting everyone to say like, “Oh, this is what you’re doing is wrong. What you should do instead is this.”
And every time it was like, “Oh yes, absolutely. That absolutely makes sense.” But it’s a necessity. And the reality is that I met some investors that were amazing, that really helped us hone in on our product, honestly. I mean, so, I was able to meet some investors that gave me feedback and gave me advice that I was so lucky to get, even if they didn’t put any money in, that was more valuable than anything else. We went to traditional seed. And then one of the things we did is that part of our round, we actually had a syndicate that participated, and that ended up being really, really valuable afterwards. I originally was hesitant about it because I was like, you have to manage all these people, but if you don’t know how to use it and if you’re active about asking for help, it is a super valuable resource, at least for an early stage. We’ve been able to get connections introductions, thanks to that syndicate from the investors that participated in the syndicate. And so we did a traditional seed from a couple of VC firms on the syndicate and the goal of the round was really to start market expansion. So, we launched Phoenix. The idea is to get Phoenix to profitability and launch it on the market. And then with that in place, going for the next round.
Meb: Good. Well, when you come to LA, I’ll be your first customer, got a lot of friends that probably use it too. And so, you’re a founder. I think you said your wife is also involved in a startup. You have a small child, with another one on the way. So, not to be busy enough, 2020 comes along and says, “You know what? I’m going to throw a pandemic at you too.” Talk about how that has impacted or not your business and how has 2020 been so far?
Luis: Yeah, so it was crazy, honestly, when this first happened…and it is crazy because I felt myself making decisions that I’m like, “Am I prepared to really be the one making these decisions?” It was always so easy when you worked at a larger company and like they told you, “This is what you’re going to do. This is the new procedures, this where you work from home.” And suddenly being the one having to make those decisions and those notices to clients and to employees, it was overwhelming. I mean, one of the first things we did is, I mean, when it first happened and the shelter-in-place ordinance came out, we essentially shut down. We’re like, “We don’t know what’s going on. Everything we stop until we figure out what’s happening.” So, we spend about three, four weeks where we didn’t do any pickups. We didn’t do any sales.
And we also wanted to hear kind of what the counties were starting to recommend for businesses in terms of how they should operate. So, about early to mid-May, April, we started getting feedback from the city telling us, “Okay, this is how you can operate as a business if you’re an essential business.” And we determined where we actually would fall into an essential business versus not. And we started doing some of those pickups. So, we started opening up very, very slowly, but it was still slow, mostly because even though we could do some pickups and do some sales, we shut down our showroom. We were only doing online sales. Most people were sheltered in place. So, we started looking at what other opportunities, you know, so COVID shut down a lot of our normal customers and a lot of our avenues for a lot of our clients, but what that are open, what are the opportunities?
And so, we started thinking about like, how has the economy and the industry changed. And one of the things we realized is that people are not really moving right now or redecorating their houses. But one of the things that’s happening is now you have a ton of businesses that are having to downsize. So, we started reaching out to businesses that we thought might be in those situations. And that was exactly the case. They were desperately looking for solutions because they needed to like close leases by the end of the month because otherwise, it had to get charged another month of rent. And they were like, this is a Godsend. So, we started expanding into that space and it’s been crazy. I mean, we’re probably up 50% pre-COVID.
Meb: I hadn’t thought about the business use-case. What is the current standard of offering and reflect back to the early 2000s when I lived in San Francisco out of college. So, I timed it humorously kind of like you did, but right after the internet bust, and remember looking on Craigslist where a lot of these dotcoms had imploded and they were just like, “Look, we have $50,000 chairs, just come get them.” It was just this crazy. What do most normal, during normal times, businesses do currently when they have to liquidate, I assume there’s services or competitors that sort of operate in this space or how does it work?
Luis: There is a little bit. I mean, so, usually what companies do is that they have some stuff and they usually tell their employees like, “Grab if you want something like a chair or something,” but the reality is that they’re still left with 90% of it. So, there is some office liquidators that really focus more on like all of like traditional like office furniture and stuff like that. But besides the office liquidators, there’s really no one similar to the residential space. There’s really no one. I mean, so you see people on…usually office managers that are posting stuff on Craigslist and posted it on like message boards for other office managers, trying to get the stuff out because, you know, they don’t get it out by the 30th. Now, you have to pay another month of $50,000, $100,000 rent. So, they’re desperately like getting…and then at the end, a lot of times they use junk a lot of stuff, which is crazy. Because you were seeing like Herman Miller like chairs just getting thrown out because the cost of not getting it out is huge.
Meb: It’s actually timely. And this is sad story, of course, but it was a restaurant in L.A., Pacific Dining Car, had been around for, I don’t know, 80, 100 years or something. And one of their locations is a casualty of Coronavirus, but they sent out an email to their list and said, “We’re selling everything in the restaurant,” but it was to one of these restaurantauction.com. And it was so horrific. It’s like eBay in like ’98, like it was so bad. And I’m just looking at them, I’m like, “This is such a…” I would actually probably have been interested in a few of the items, but I’m like, “I can’t even begin with this user interface. It’s so terrible.” So, that’s actually a really interesting use-case. There’s probably a ton of opportunity for.
Luis: Yeah. Another big one for us is actually self-storage because we’ve had a lot of people…I mean, so, I mean, they’re saying about one out of every nine adults in the U.S. has a self-storage unit. The average time is that they’ve had it for about three years. And the biggest reason, I mean, I remember I was a culprit of this when I moved back. When I graduated from college, I lived in Miami for a while and then moved to New York. And when I moved, I put everything in storage. I was like, “Oh, you know, I’ll come back and do it next month.” And it was like three years later. And at some point, I was like, “What do I do with this?” So, we do a lot of pickups where people’s like, “You know, I’ve been paying for this self-storage for a very long time. I don’t know how to deal with this. So here’s the key, take it all out, deal with it.” And that’s it. And that’s a huge market.
Meb: Do you guys should have talked to some producers in L.A? I feel like you should just have a camera go along on half of your Remoov. It’s where like some of the stories and situations and a whole entirely new opportunity for you guys that’s targeted the hoarders. It’s like a hoarder intervention where you say, “Look, your family’s going to pay for it. They have to sign off on it, but we’ll come in and clean house and get rid of all your shit and pay us a certain amount of fees.” I’d watch that show. That’d probably be a great show. But the self-storage is interesting. I mean, one of the reasons that I’m so positive on your idea and the concept in general, was it’s hitting on this theme of consumption one and being able to recycle the amount of things that most of us obviously don’t even need. But even if we did, we could get some value to spend on other things and also tied to the securitization. It’s such a cool concept, but self-storage, what a massive industry.
Luis: And to your point, I mean, so one of the things, and one of the themes that is very core to us is that, I mean, and I believe this, which is like, we are seeing a changing relationship between us and our things, where…and part of it could be e-commerce where it’s so easy to buy something. You buy it, use it once and then you put it to the side, but our society is becoming less and less attached to those physical items. So, we buy more and we throw away more, but we feel bad about throwing stuff away. So, how do we make something that falls into that trend, which is like, we know we’re less connected to our things, but it’s easy to buy things. So, how do we make it so that you have actually a positive feeling when you’re moving on from those items as opposed to feeling guilty? And that is one of the things that we’re trying to build on and trying to make it easy for a lot of our clients.
Meb: Yeah. And I think the younger generation has a different relationship, least all those damn millennials. Tell me some stories. Do you have any particularly memorable moments from picking up people’s junk or you found either something really valuable or people that were totally insane, which is most people, or things that were just so scary, you couldn’t even begin to talk about? I’m sure there’s probably a gazillion.
Luis: Yeah. I mean, we’ve had a…I mean, it was crazy. I mean, because when we started, I myself had an original co-founder, but we did the first hundred pickups ourselves. We rented a public storage unit and then rented a U-Haul and we would just go around and pick up people’s sofas and bookcases and computers. So, we saw a lot of craziness. And we don’t do stuff like… Sometimes we’ve gotten houses, which is like hazardous waste. We don’t do any of that stuff because you need specialist expertise and like equipment for that. But we, yeah, we’ve gotten some crazy stuff. We’ve had one where we picked up this for my client and she gave us this bicycle and it was supposed to be for recycle. And then we had one of the appraisers look at it and they’re like, “Oh, this could be really valuable.” Ended up being like a very vintage bicycle from like the ’20s that we sold for like $7,000, $8,000. That was one of the very positive ones. We’ve had a couple of paintings that were way below what we expected or like clarinets that were also in the same space. And then we’ve done some pickups where we picked up adult entertainment, like crazy.
So, that happens a lot. But yeah, it’s funny. Because, I mean, I told someone once, we have a company that is very unique in its space because people are allowing us into their homes as strangers. I mean, they let us into their house, they give us their stuff and then they pay us for that stuff, for that pickup. And then they say, thank you because what we realized early on is that what we’re selling is not that we sell it for you. What we’re selling you is that peace of mind of like my headache, my space is back to being mine. And early on, we thought like, okay, we’re a reseller for stuff we sell for you. And there was a completely wrong kind of like explanation of our service and our value offering. And it was only a little bit of time later that we realized that, well, we’re offering you is that we’re removing that headache and we’re giving you that peace of mind and your space back. And that was very, very powerful. And that really changed the whole company.
Meb: Yeah. I mean the narrative is really three pieces. It’s, you’re getting rid of my crap. You are saving me the time of dealing with it and optimizing it too, which I think is a big one. And then lastly, you get something back. You either can get some cash or the donation receipts, all that’s super valuable.
Luis: And ideally, I mean, you’ve got another one, which is like, you’re reducing waste. I mean, the amount of waste that goes, I mean, because nowadays if you throw away a computer that still has value or a desk, I mean, that’s going to landfill, and that’s bad. I mean, so that’s bad, not just for the environment, but that’s bad for the economy. That’s reducing productivity in the economy because now you’re having to make another one from scratch as opposed to extract all the value that you have from those items. And if you want to increase the productivity of society, I mean, bringing new life into those items and getting them cycling through the economy well, and what we call the circular economy, I think provides a lot of value for the economy in general.
Meb: Well, this would be a perfect partnership with one-click divorce because as people are getting divorced, they separating all their items, getting rid of stuff. I’m looking around my room, you can’t see it because it’s green screen, but I would 100% get rid of 80% of the stuff in here, particularly when my wife’s on vacation. How do you think about acquiring customers? Because there’s probably some unique channels and demographics that are already looking for your services, but other perhaps require education and word of mouth. How do you guys go about getting the word out and finding the right customer you’re looking for?
Luis: Yeah, I mean, so we do…I mean, one of the challenges that we have is that we are building what we consider a new category. Like people are not searching for like decluttering service, that doesn’t really exist in Google. It’s not something people Google for. So, we have to figure out what ancillary services or what other points, what other things are our potential customers doing and intersecting ourselves into that flow. So, you know, a lot of our customers are people that are moving. So, what happens if they do, they need to contact like moving companies. A lot of times they need to contact real estate agents. They might be searching for school. And through that type of like that understanding life cycle, that customer, understanding where do we need to get into and what are they searching for that time? And then doing the Google ads and Facebook and all that fun stuff. And then working a lot through referrals. So, word of mouth and previous customers and working a lot with those clients that are…with those professionals that are also helping those customers like a real estate agent and working with them is…those are really the best way to do that. We found in terms of like building a sustainable growth tactic.
Meb: Yeah. I feel like that’d be an endless rabbit hole of optimization. So, many different behavioural, psychological like strings you could pull on people of that whole area. As you think about the future, you guys expand, continue to have success, what does the next one, three, five years look like to you guys? Is the main focus… And what’s the head count now? Kind of where are you in the process? And then what does the horizon look like?
Luis: When I started the company, I had several things which I wanted to do. The first thing was like, is there a demand for this? And early on, it was just a matter of like, do people need the service? That was the first thing we figured out. Then the second one is like, are people willing to pay for the service? Okay. We figured that out. The next one is like, okay, can we build the necessary infrastructure so that we can actually scale a market? And we did that. The one afterwards was like, “Okay, can we actually make it so that every customer becomes positive unit economics.” We were able to get to that. And then he was like, “Okay, can we scale, have a market at scale?” And we did that. And then for us, the next challenge is like, “Okay, can we build now a model that we can quickly expand from market to market? And what are the things that we need to do to expand into that market so that we can quickly scale those new markets?”
So, that’s the stage that we’re in right now over the next nine months, that’s where we’re focused on is understanding what are the things, what are the steps that we need to launch to market and grow it. And from there, it’s really going to be like more of a national expansion. And in the meantime, as we’re doing all that is all in the text front, which is like, how do we automate as much as we can in our process and how do we extract as much value as possible from everything that we’re doing so that we can reduce cost, increase the resale value of items, move the inventory more quickly. So, that’s our focus over the next couple of years.
Meb: What’s…this may be trade secret, so feel free not to answer, but what is the traditional floor on an item’s worth that you find it being worth your time to list? Is it 10 bucks, 20 bucks, 100 bucks? Is there one?
Luis: Oh yeah. So, I mean, we get this question a lot from customers that ask us like, “Why can you resell this? Someone might be willing to do it.” And the reality is that there’s a cost for us to pick up an item and appraise it professionally, photograph it, store it, and then sell it. It’s expensive. And then we give money back to the customer. So, we only have a portion of that. And if we sell it through one of the other marketplaces, there is also a marketplace fee. So, the way we think about it is we usually for large items, think of a sofa, something like that, we accept for resell, usually, items that we expect can resell for at least like 200 bucks. And for small items, more like 40 bucks. A stump that’s lower than that, but it’s still in good condition, we take care of donating. And then we kind of also know what the donation companies accept and don’t accept. So, the stuff that we know they can accept would take care of disposing of recycling.
Meb: What are some of the other…for whatever reason, this just reminded me of this. Are you familiar with the concept of dumpster diving?
Meb: So, there was an article in “Wired” a few years ago about a guy who worked in IT at some tech company in like Houston. And he would go out at night and sift through dumpsters to find stuff the companies would throw away and then resell it. But the big stunner of the article is he made six figures doing this. And so, some like astonishing amount of money that these companies would throw away. And so, sorry, total non sequitur, has nothing to do with anything, but…
Luis: No, but that’s right. I mean, already today, the secondary goods market, which is anything that’s been pre-owned is about $100 billion. And I actually think it could be much, much larger, but it is still fairly inefficient, especially for certain categories. I mean, if it’s like an iPhone, I mean, there’s good marketplaces for like an iPhone. And it’s very easy to also understand what kind of like the current market price for different models, because it’s pretty standardized. But for everything else, there really isn’t, there’s so much friction in terms of like, you have something and you want to get it to someone else, not just the haggling and listing it, but then negotiating and getting it from my house to the other that a lot of times, people just throw it away. Well, there’s a lot of value there. I mean, I showed a statistic that it takes an average of four hours to sell one item online, which is great. You know, you have one item, maybe you do it, but now I’ll talk about, you have 10 items that you have to sell, 40 hours. How much has 40 hours of your time really worth? And when you start thinking about those times, I mean, that’s why people are like, they’ll say they’ll rather throw it away than have to like spend 40 hours getting rid of 10 items.
Meb: What ended up being some of the biggest channels you guys sell-through? Do you actually still use Craigslist and eBay? Or is it like Poshmark or do you use like 20?
Luis: Yeah, so we use like 20. So, one of the things we did, we did launch our own marketplace. So we sell a lot through our own market place. And mostly because a lot of people were always asking us what we had. So, we decided to launch one, but it’s, our focus is really working with other partners. So we work a lot with Cherish whenever it was like some certain types of furniture that we know they do well in, eBay, Poshmark OfferUp, Letgo. And there’s a bunch of others. You know, if you’re selling music equipment, it can be Reverb, great marketplace for music equipment.
Meb: Just also… This is the most scattered conversation. I apologize. You also just reminded me that there was some reveal about how big the business was of the airline loss baggage that I think is located in either Arizona or New Mexico. Have you heard about this? They run their own marketplace, right? I think.
Luis: Yeah. Also police departments, it’s a big one for stuff that was lost and found or confiscated, all that stuff. Every city also has these little auctions as well.
Meb: What are some other sort of FAQs that we didn’t touch on that kind of people either ask you guys a lot or you feel like you’re talking a lot about that you think is either interesting or part of the business model we may not have talked about?
Luis: Yeah, let me see. I mean, the main questions people ask is like, okay, how do you determine what has value? And because it’s hard. Because some people really think a lot of stuff, they have precious items. It happens to me. I mean, one of the challenges that people… Styles and market demand changes. I see one from my mom. My mom has been wanting to give me her China for the past 10 years. I don’t want any part of that. I don’t have space. I mean, just think about how much real estate costs. I mean, and just storing that stuff in my house. I mean, I actually did calculate this, which is if got her China and I had to store it in my house. How much am I paying in rent for storing that China? It is astronomical. I’m like, it’s just not worth it. It’s not even worth the price of the China, but she’s like, “Oh, but your grandmother.” But so that is one of the things, like people forget how much their space is worth. And especially with rents in a place like LA is the same, but San Francisco, how expensive rents are. And if you’re stored it with this stuff, it is one of the things that we try to like really talk to customers about is like, think about all your stuff that you’re not using to think about how much it’s costing to keep you there. And then all the headaches that those things are bringing you.
But one of the challenges is those things that styles have changed and different things like China cabinets or even bookcases. I mean, people are not buying as many books. Now you have your Kindle and that’s kind of it. So you don’t really need to think to put books in. That is sad because there is some great pieces that we just can’t move anyway. And we tried. One of the things that we’re trying to work on is, okay, how do we build other avenues so that we can monetize, or even if we don’t monetize it, but we can minimize the amount of stuff that goes to the dumpster. And that is one of the things that we’re trying to work on, especially as we continue to grow, to find more avenues to that, because, on our end, we continue to fall into a better mission of reducing waste, but it also reduces our costs because we’re not having to pay like recycling disposal fees. So, it’s kind of a win-win, it’s just building those marketplaces on those operations to make those happens. And so, yeah, we have a long way to go.
Meb: And so you’ve seen a fair amount of interest in the marketplace of the buying and selling for…on y’alls website. Like who’s going there. Is it people like looking for a deal?
Luis: So, you do get that a little bit, but it’s mostly people that are…you’re gonna love it. So, we have some very high-end quality brands from everything from like Stickley to Pottery Barn. So, I think it’s a place where…this is honestly very me. I buy pretty much, even before I started Remoov, I was one of those I’ve always bought used because I realized that the arbitrage would like, you know, being able to buy something that was like 6 months old and I could get it for 40% of the cost. Like I was like, “I don’t care.” But you do get a lot of that, which is people that don’t want to pay full price for something retail. And, you know, you now can buy a restoration hardware sofa instead of paying $3,000 for it. You’re paying $800. So, you get a lot of people that are moving into new homes, similar to the way we move.
We tend to work with people that are getting rid of a lot of stuff. A lot of our buyers also are the same. They’re trying to get a lot of stuff because if you’re turning like furniture house, you are having to go from like one place in crisis to another one trying to collect one thing and another, and instead, they can come to one location where like, everything’s kind of like curated, inspected and everything’s transparent what we disclosed any blemishes, and you can get everything in one place, that tends to be our main customers, people who are like needing to get several items and they don’t want to deal with haggling on Craigslist as well.
Meb: I imagine at some point in the future, you have an analytics edge as well where almost like you could just like arbitrage goods across the internet as one of these drop shippers would do. That’s funny. I could go on for hours, peppering you with these ridiculous questions and brainstorms that I have. What’s been the most memorable part of this experience so far, you’ve been at it for…when was the origin date for Remoov?
Luis: So originally it was Naked Room originally, but it was like 2014. And then we rented to Remoov, and we’ve kind of been growing since, but honestly, I mean, so this is one of the best memories that I have. It was actually very early on, one of our first pickups, which is when we first received one of those first checks, because at the time we were like doing checks and that was the moment that I realized that it was one of the pickups. One of the first ones I didn’t do that. We had hired a team to actually go do it. And it was beautiful because it was a moment that I realized it was like, okay, so someone’s willing to pay us X amount of dollars for the service. That means that they value the service that we’re providing more than this money, more than this check.
And then we were able to hire people that were willing to do this work because they valued how much they’re getting paid more than, you know, for their time. And then we are all better off because we’re willing to set all this up to receive this money in return. So, by having created that idea, we actually made everyone better off. I mean, the customer was happier. The employee was happier, the employer was happy. And that was the one thing that was like amazing. It was like, “Okay, we came up with something that we made an entire ecosystem better and we provided significant value.” That was probably my most memorable memory, is realizing that like we’re making everything better and we’re providing value across the board for something that we came up with.
Meb: And hold your feet to the fire. When’s your ETA for LA?
Luis: So we’re hoping for LA pretty soon. The challenge is that LA is so large that it can be a logistics nightmare, but we’re hoping it’s going to be in one of the next two or three markets. It makes all the sense in the world. We’re just trying to figure out like, how are we going to deal with a market that is that large. So it’s probably going to be one of the challenges, not for the first one. We didn’t want to do it as one of the early markets, because there’s just more complexities for what we’re still bringing out. But one of the next two or three,
Meb: And like I said, I’ll be your first customer. I would have. Is anybody giving you guys a car yet to sell?
Luis: We have.
Meb: Really? I feel like selling my…I had an old Land Cruiser, 1960s. It took me like a year to sell. It’s how much time I spent with these very niche-specific things that people are looking for. That’s interesting. Do you remember what kind of car?
Luis: We’ve had a couple of cars and sadly we are actually…I saw…had it up from ship, I don’t know, six months ago or so, but we actually tried selling it through ship because it’s the same thing for us. What we’re trying to do is connect inventory with the right marketplace. But unfortunately, it was both cars. They didn’t accept. So we had to sell them individually, but yeah, we’ve gotten crazy stuff. We’ve gotten saunas, jacuzzis, crazy stuff.
Meb: I normally don’t ask the entrepreneur founders this question, more aimed at the investors, but you mentioned you also worked at a hedge fund for a while. What’s been your most memorable investment personally, over the number of years? You’re not allowed to say your company or your domestic partner. What else?
Luis: Yeah. I would say two, one on the public side and one on the private side. On the public side, it was 2008. It was right before things kind of started going down. And I was very lucky where I was actually one of those. I kind of thought it was going to happen before it happens. So I did, unfortunately, I was not able to time to be recovery, but on the way down, I was actually able to go short. And at the time it was a company called Blue Nile, which is still around, but the whole idea was like, okay, this is a luxury product. And, you know, if the economy goes down, they’re going to go. And it was one of my first investments. It was probably I think my second investment ever. And I put a short on that and that actually made my year.
I mean, it probably solids me from getting fired in 2008, 2009. And then on the private side, one of my good friends started a company called Mighty Hive. And the reality is that I didn’t really understand anything about what they did, but there were programmatic advertising. I just trusted him. I knew he understood. He came from Google. He understood up and down the marketing and advertising side. And I think it was like his second angel investor and ended up doing amazing. I mean, did just a seed round and ended up getting acquired. So, that was my most memorable on the private side.
Meb: Congrats. And I was laughing because you were talking about the shorting one because not too many people, particularly in the early days when they have their first short experience, it almost never works out, I feel like, so kudos. Where do people find out more information if they want to follow what you guys are up to, they want to schedule a pickup, where do they go?
Luis: So, you can go to our website, remoovit.com. That’s remoovit.com. Also feel free to send me an email, that’s email@example.com and then we’re all on all the fun social media sites, Twitter, Instagram, Pinterest, and yeah, drop me a line. Happy to answer it.
Meb: All right, readers, you heard it. Luis said you can email him and send them all your weird stuff. So, let me know what you end up receiving. Luis, thanks so much for joining us today.
Luis: Thank you, Meb. It was a pleasure.
Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us firstname.lastname@example.org. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. My current favourite is Breaker. Thanks for listening, friends, and good investing.